Will the Internet of Things Still Be a Thing in 2016?

Some of the smartest marketers in the world read this publication. So I don’t really need to tell you that categories don’t sell products; applications do.

Put another way, customers don’t experience categories. They find value in functions that work — and work right.

We talk about the Internet of Things as though it were a full-scale market revolution. Yet when the data tells us customers don’t understand this market category, analysts conclude such confusion is a barrier to people adopting products that fit into that category.

By that same logic, a lack of comprehension of gigahertz should have been a barrier to adopting the microwave oven.

Where’s the Beef?

Two days ago, Gartner analyst Peter Middleton penned a report predicting that the worldwide count of Internet of Things endpoints will continue to grow at a compound annual growth rate of about one-third through the year 2020. (Note the projection refers to “endpoints” and not “active endpoints,” which leads you to wondering whether the number of 9,600 baud modems in the world is also continuing to grow.)

Yet a full two-thirds of these endpoints, according to Gartner’s conclusions, will be devoted to consumer applications.

This projection follows up from Middleton’s report from November, which projects that spending on consumer IoT hardware will outpace spending on business-class IoT hardware, also by 2020. This after acknowledging that an automobile now counts as an IoT endpoint.

So if we keep expanding the IoT category to include more things that might have sensors in them (cars, shirts, wristwatches, pacemakers, Hot Wheels, etc.) our takeaway appears to be that the IoT category will continue to expand.

The case for which Gartner has been collecting evidence this year appears to be that the mass consumer market’s adoption of the IoT is forcing, or compelling, or agitating the enterprise to do the same. This will eventually happen, business analysts are pleading, even when the inhibitors their data brings to the surface happen to be the big, nasty ones.

After security and privacy, which are always huge concerns, the main inhibitor from Gartner’s data has been the lack of a compelling use case.

Some analysts appear to be blaming businesses themselves for not coming up with a compelling use case for them. The IoT is not living up to analysts’ early forecasts, so by all means, let’s blame the early adopters for sleeping on the job.

There’s so much compelling evidence from the consumer market that IoT can and will be disruptive, wrote one IDG contributor in April, that businesses have no option anymore but to embrace IoT as a market category, if they are to maintain the illusion of competitiveness.

Except there is an alternative option, as Gartner’s later data shows: Businesses can sit and wait for a proper use case to present itself first.

Postage Stamps

Perhaps we’re missing a deeper meaning here.

There’s a certain sensibility to the following notion: If sensor devices can be mass-produced like postage stamps, with wireless connectivity to nearby hubs and a modicum of programmability, then there’s very little reason not to endow just about everything with an IoT postage stamp — even if the “killer app” for such a sensor doesn’t yet exist.

You could put IoT stamps on the back of picture frames. Perhaps no one has written the app yet for tracking the motions of fine artworks on gallery walls, but if the stamps were already there, someone would get the courage and incentive (and maybe a little financial backing) to start.

It’s a Steve Jobs lesson applied to every conceivable application: Build the platform first, and then people would be more likely to want to use the device that has a working app built on that platform.

Suddenly Middleton’s logic doesn’t seem so self-serving, does it? Yes, we can keep enrolling new classes of devices in platforms, as long as the cost involved is trivial or even non-existent, and even if the application for the platform has yet to materialize.

So in such a scenario, why would consumer applications dwarf business applications? Is Gartner implying that enterprises have run out of good ideas for business platforms?

What are we missing here?

Perhaps a business analyst isn’t the person we need to be consulting for these questions. Maybe we should speak with someone standing on the field where the grass is supposedly greener.

Leverage

“This is just about bringing a level of connectivity, intelligence, and control to a class of devices that are generally smaller, that have less processing power than a smartphone, and that are lower-power,” said Ross Rubin, Senior Director of Industry Analysis at mobile market data provider App Annie.

“The other part is imbuing products that we use today with more intelligence,” Rubin continued, in an interview with CMSWire, “and seeing what can come of them.”

As one of the consumer electronics industry’s most respected and published analysts for the last two decades, and most recently as the publisher of crowdfunded projects publisher Backerjack (and yes, as my occasional partner-in-crime for much of that time), Rubin has seen hundreds of successful new ideas come to fruition in just the past few years, including several that leverage the growing power of IoT.

One example Rubin cited is the Tao WellShell, a highly pressure-resistant mobile controller that attaches via Bluetooth to a smartphone app.

A person seeking some assistance while exercising can use WellShell in any number of variations to strengthen or stretch muscles, while the device leverages the smartphone for logic and recording functions.

Here’s another one: the Ring connected doorbell, which includes a wireless video camera that sends a live picture of your front porch to your smartphone, wherever you happen to be.

Already you see a pattern, which Rubin described as “extending the functionality of people.” And that’s the key — not the extension of the Internet, which only matters to folks who have investments in infrastructure.

WellShell and Ring are IoT apps, but just barely. The truth is, the consumer doesn’t really care. They take a necessary function of everyday life, and extend it by means of the simplest, and frankly the narrowest, available form of connectivity between devices.

“We’ve seen a lot of very specialized fitness trackers, golf swing analyzers, tennis stroke analyzers — things to help improve specific tasks,” Rubin told me. “I would say there’s crossover to many of those elements into the enterprise space, where there is a nearer-term ROI that is not as clear in the consumer market, and many of the examples — asset management, fleet tracking, different types of inventory monitoring — can all provide the same kind of intelligence to real-world behavior that online and mobile analytics have done in the digital realm.”

Then there are emerging platforms to help these companies build the devices that connect to the logic — for instance, the Arduino platform for rapid prototyping; the Thread platform for secure device communication, set up by Samsung and connected thermostat maker Nest; and a new platform from the Bluetooth SIG for so-called mesh networking.

By lowering the barriers to entry, all of these platforms enable small companies with small ideas to build small products for small market segments ... that become profitable, beneficial, and more to the point, good. And consumers invest in them for that reason.

There is no over-arching, looming revolution compelling consumers to invest in Internet of Things technologies, whatever they may be, for the sake of the market category alone. Why would anyone, then, come to the conclusion that businesses would be, or must become, compelled by some similar, unseen force?

Endgame

Right now, the IoT applications that Rubin sees making headway for the enterprise are highly focused use cases.

Again: necessary functions for small numbers of users, made feasible and affordable by inexpensive platforms with low or non-existent barriers to entry.

“This is the endgame: Providers of services want to reach the consumer in the context that the consumer is in,” said Ross Rubin.

If you’re wondering where the enterprise IoT apps are, perhaps it’s time to realize that the context that business users are in, is not an IoT context, because the IoT context is not the real world.

“The idea is to provide real-world intelligence to what has recently been exploited in the digital world, in terms of metrics and business intelligence,” Rubin told us. “Today, online, data has supplanted intuition for many decisions. That is the promise of many of these IoT applications in the enterprise space.”

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